Chapter 7 Bankruptcy: The Pros and Cons
Filing for bankruptcy is a decision that can have a big impact on your life. These cases can be complicated and confusing for many folks, and you may not realize how much your filing may affect you, your family, and your business. Before filing for bankruptcy, it’s a good idea to consult with an experienced bankruptcy attorney. Even figuring out which type of bankruptcy you should file for can be overwhelming, but a qualified bankruptcy lawyer can explain the process and help you to identify which kind of bankruptcy would be best for your situation.
In the event that you and your bankruptcy attorney decide that a Chapter 7 bankruptcy claim is the best way to go, you’ll want to have a complete understanding of what’s involved and what this filing means for your future. Here are just a few pros and cons of Chapter 7 to get you started:
- The process is shorterOne of the good things about filing for Chapter 7 is that the process doesn’t last long. In a typical case, the time it takes from filing to debt relief is around three to six months. Other kinds of bankruptcy cases can take years to resolve, depending on the circumstances.
- You can keep assets deemed necessary for workThe majority of states in our country allow debtors to keep assets that are considered necessary for their work. In some cases, you may be able to keep a substantial amount of your assets. You’ll also be allowed to keep wages you earn or any property you buy after filing.
- You don’t need a certain amount of debt to fileYou aren’t required to have debts of any specific amount in order to file for relief under Chapter 7. And because the filing fee for Chapter 7 is nothing to sneeze at — $335 per filing — this can make a difference for those who have even a small amount of debt but don’t have any means of paying it back.
- You won’t have a good credit rating for yearsAlthough the process is quick, you’ll be stuck with the resulting hit to your credit for years. A Chapter 7 filing can stay on your credit report for up to a decade. While this doesn’t mean you’ll be unable to obtain credit, you’ll be subjected to much higher interest rates and fees.
- You can’t file for Chapter 7 again for another six yearsYou’ll need to think ahead with your bankruptcy attorney when filing. If something worse happens financially, you can’t file another Chapter 7 case for six years after your first filing. If you need to seek help again, you’ll have to file for a different type of bankruptcy with different rules.
- There are some types of debt you can’t eraseEven though Chapter 7 involves liquidation, there are certain types of debt that aren’t impacted by your filing. Alimony, child support, student loans, and mortgage liens are not wiped out by a Chapter 7 filing. You will still have to repay these debts after your case has concluded.
Let us help you get your life back on track. We’re here to help walk you through the process and answer any questions you might have. If you want to find out more about the different types of bankruptcy filings and which one might be right for your situation, call our bankruptcy lawyers today.